Stuff Your Savings, Not Just Your Stockings: Beating Holiday Inflation

The economy is giving mixed signals:

Mortgage rates are dropping, but people are finding it hard to buy a home, let alone keep it.?

And between you and me, I feel that the economy will only get more “interesting” as we continue going through the months to come. Especially September. While I could tell you want to do with your investments, I’m more focused on your savings. Why? This is still a prime time for you to be saving - for emergencies, experiences, and most importantly expenses to come in the near future.?

Why? Because I want you to still have balance no matter what the balance of your bank or retirement account says. I remember one of my teachers eons ago saying when you fail to plan, you plan to fail. I rolled my eyes at this notion, but as my age grew my understanding of that theory was confirmed. I know that some folks have a tough time making it day by day let alone thinking about tomorrow (end of year or retirement years) planning as much as you can when things are shaky will give you some structure to build no matter what.?

Did you see the news about credit card debt? Collectively, Americans owe $1.14 trillion on their credit cards. I know some might be in it for the points, but some are still experiencing the pain of using credit cards to fill the void that inflation is placing in their budgets. Last month on social media I talked about Christmas in July. Not the Hallmark movies that we love, but the debt that we hate to get for overspending on the Holiday. No matter what you celebrate, debt can be a pain during that time of year. Folks are probably still paying off last Christmas’ debt while making a list for this Christmas.?

I wrote a blog post about Holiday debt a while ago, but I wanted this newsletter to help you plan early so you won’t fail in debt later. APRs are mounting up like the latest episode of Game of Thrones or the Dragons as some of us affectionately call the show. Not only APRs are taxing, but folks are finding themselves being tapped by debt collectors for using BNPL. My charge to myself is to break down finances/money for more people to understand it and expense what they can within their income.?

Recently on social media, I posted about how to break down saving $1K for holiday spending (gifts, games, decor, experiences) within your budget. Why? The average American spends roughly that each holiday season. I like looking at the stats to help you configure your stacks. Think now, who’s on your list - check it twice. To know if your budget could handle it or not. Does your list break your budget? Did you build your budget for the holiday? I know so many questions.?

So, here’s how I want you to reshape how you’re spaving for the holidays:?

(Spaving = spending and saving).?

1. Review Last Year’s Spending

Look at last year’s holiday expenses. Use this as a baseline to plan your budget for this year. Also, look at when you spent the most money. Was it during Black Friday? Plan for shipping. Tip: Adjust your spending plan based on how much you spent last year and any changes in your finances.

2. Audit your wallet

Check your current budget to see if you have room for extra holiday spending. Go back to my saving challenge to see if this will help. Tip: Allocate specific amounts each month leading up to the holidays to avoid financial strain.

3. Create a [ realistic] Spending Strategy

Decide how much you want to spend this year, factoring in inflation. Tip: Increase your holiday budget by 3-5% to cover rising costs. I’ve stressed this over the years, so this year is no different.?

4. Plan Your Purchases

List all holiday expenses, from gifts to decorations. Using gift cards and credit card points will help you pace your purchases. No overconsumption this year.? Tip: Plan purchases around sales like Black Friday and Cyber Monday to save money.

5. Implement a Sinking Fund

Save a set amount each week or month for holiday expenses. For example, saving $20 a week can add up to $1,000 by Christmas. You know that I love Ally and their buckets/sinking funds to track your savings. Tip: Start your sinking fund as early as possible to spread out the savings.

6. Monitor and Adjust

Regularly check your sinking fund and spending plan. Tip: Make adjustments if you’re falling behind or if your spending plan changes.

7. Avoid or minimize debt

Aim to use savings instead of credit for holiday expenses. Tip: If you use credit, pay off the balance as quickly as possible to avoid interest - know how your interest is applied/calculated towards your swipe.?

8. Factor in Inflation

Adjust your budget for inflation, which increases the cost of goods and services. Tip: Save a bit more each month if inflation is high to stay on track with your spending.

If you are sad that you can’t spend or save like you did in the years past, you’re doing fine. Seasonal depression is real when it meets financial stress. Balancing it by doing what you can. Even if that looks like just buying a collective gift for a family member or in general. Doing what you can will be the greatest gift of all. It’s all about setting realistic goals, sticking to your budget, and making the most of your savings.

Tell me what was the best gift you ever got and the best gift you ever received. If you can’t think of anything, what is one amazing memory you have of the holidays??

If you need help creating a budget, tracking your progress, or crafting a personalized financial plan to reach your goals faster, don't hesitate to reach out! Let's ditch the pressure and build a financial future we can all be proud of.